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Amazon gaining on Walmart's market share

Amazon is rapidly taking over consumer share from Walmart. (iStock/AdrianHancu)

Amazon and Walmart seem to have a stronghold on consumer spending, depending on the region of the country, and Target is falling behind. According to recent data released by ARM Insight, the spending also widely varies depending on the age demographic of the consumers.

For example, millennial spending in California and New York was very different from states in the South. In California and New York, Amazon has increased its market share from just over one-third to nearly half since December 2016. And it seems Prime is a big factor in this change.

"Amazon Prime membership and geography has a profound effect on merchant selection," Jason Hills, chief revenue officer for ARMS Insight, told FierceRetail. "For example, in Oregon, Washington and New York, Amazon Prime members choose Amazon over Walmart by 3:1; non-members in the same states spend about equally for those merchants. These ratios favor Amazon a little more for millennials, but the relationship is largely the same."

While in New York and California these younger shoppers prefer to spend on Amazon, millennials in Florida and Texas still favor Walmart. Walmart captures more than 60% of the spending among millennials in these two states and has maintained a favorable share for the past three years. And specifically in Florida, consumers spend twice as much at Walmart than on Amazon, which is also twice their spend at Target.

In Washington, D.C., Amazon is the clear winner, where spend is greater than Walmart and Target combined.

So why is Amazon's share so much stronger in certain parts of the country than others?

Hills suspects that Walmart had a profound impact in rural areas because it offered superstores in places previously thought impossible to support. Therefore, this transformation led to significant customer loyalty. Plus, he noted that shipping to these rural locations might be slower, a negative mark for Amazon.

And then there is Target, which has fallen behind both of the other retailers.

"Our analysis shows that not only are Amazon customers more loyal, they also spend significantly more on average, thus indicating higher disposable income," Hills said. "Target positions itself as being up-market from Walmart, thus Target was first to have its market share impacted by Amazon’s growth. We can’t help but wonder: Does the Walmart/Target story parallel the Barnes & Noble/Borders story a decade ago?"

Suspecting that the trend will continue, Hills expects that by the end of 2018, millennial and Generation X consumers will prefer Amazon over Walmart in many, if not most states.